Micron Technology stock soared Thursday after the memory-chip maker smashed estimates for its fiscal second quarter and guided above views for the current period thanks to robust spending on data-center infrastructure for artificial intelligence. Micron stock notched a record high on the news, leading a rally in semiconductor shares.
Late Wednesday, Micron posted a surprise profit for its fiscal Q2 ended Feb. 29. Sales jumped 58% year over year to $5.82 billion. Adjusted earnings surged 122% on an absolute value basis to 42 cents a share.
Micron's results got a lift from the AI infrastructure spending boom as customers snapped up its high-bandwidth memory DRAM chips. Plus, Micron saw demand improve across most of its end markets, including PCs and smartphones.
Other major chip stocks also rose on Thursday, including Broadcom, Intel, Nvidia and TSMC.
"We are in the very early innings of a multiyear growth phase driven by AI as this disruptive technology will transform every aspect of business and society," Micron Chief Executive Sanjay Mehrotra said on a conference call with analysts.
"We view Micron as one of the biggest beneficiaries in the semiconductor industry of this multiyear growth opportunity driven by AI," Mehrotra said.
Micron Stock Spikes After Report
Micron's memory chips will benefit from AI growth in the data center and on edge devices. Plus, it will play a key role as the industry chases the ultimate goal of "artificial general intelligence," or AGI, Mehrotra said. Artificial general intelligence is a type of AI that can perform as well or better than humans on a wide range of cognitive tasks.
On the stock market today, Micron stock jumped 14.1% to close at 109.85. Earlier in the session, it hit an all-time high of 113.50.
The combination of the Fed standing firm on expected interest rate cuts coupled with bullish AI commentary on growth and demand by Micron "is likely to reignite the AI semi FOMO (fear of missing out) trade," Jordan Klein, managing director for tech, media and telecom sector trading at Mizuho Securities, said in a client note.
Micron Gets 20 Price-Target Hikes
At least 20 Wall Street firms raised their price targets on Micron stock after the earnings news.
"Micron earnings commentary ticked every box in the investor checklist (and then some)," Wedbush Securities analyst Matt Bryson said in a client note. That checklist included a favorable industry outlook, increasing average selling prices and a mix shift to higher margin products.
Bryson reiterated his outperform rating on Micron stock and upped his price target to 130 from 103.
Rosenblatt Securities analyst Hans Mosesmann was even more bullish. He kept his buy rating on Micron stock and increased his price target to 225 from 140.
"The memory cycle we are about to witness will be the biggest in history, driven by an AI cycle that is revolutionizing compute in a secular fashion," Mosesmann said in a client note.
Raymond James analyst Srini Pajjuri raised his price target on Micron stock to 130 from 100. He maintained his outperform rating.
"HBM (high bandwidth memory) is arguably the strongest secular driver the industry has ever seen," Pajjuri said in a client note. "Management stated that HBM is completely sold out for calendar 2024 and the 'vast majority' has already been allocated for calendar 2025."
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